Improved business environment should not be expected to reap short term results but would instead be a scorecard for long term benefits in trade and investments in the country, Alfred Kombudo, Coordinator of Investment Climate Programme at the EAC Secretariat has said.
Kombudo made the observations in an exclusive interview with Business Times after the launch of the Doing Business Report in Bujumbura, Burundi, last week.
“The reward is both a long and short term. We should not be discouraged by low foreign direct investments and trade deficits in our economies,” he said.
He noted that despite the low FDIs in the region, a better and regulated business environment has recorded some long term benefits, especially the inclusion of people who might have been excluded from becoming entrepreneurs.
“People with limited capital but with great ideas through reforms were given a chance to start off their ideas, and we shouldn’t forget that the small businesses of today are the bigger businesses of tomorrow,” commented Kombudo.
He said that section of society facing the largest obstacle in getting a chance to do business will get a fair-shot to do so.
“The results are really on ground, and we shouldn’t only focus on the overall growth
of GDP or projected FDI but we should also see the growing number of entrepreneurs and improved lives,” he said.
According to the report, lower costs of business registration encourage entrepreneurs and enhance productivity.
“There is a very strong relationship between business environment and investments on the ground and EAC needs to strengthen the ability for countries to corporate,” noted Peter Ladegaard, Regional Programme Manager for Investment Climate Advisory Services at the World Bank Group.
He disclosed that World Bank is committed to improving business environment and promised to provide the necessary support upon government request.
Economies where registering a new business takes less time have seen more businesses registered thereby bringing out the greatest potential for growth. Recently, Rwanda further reduced the period it takes to register a business from 24 hours to six hours.
Kombudo hailed the political will among EAC heads of State in implementing and improving the business environment.
“There is no political risk that is likely to lay down the good work that is going on. Instead, I see commitment from governments in the process towards full integration,” he assured.
Some areas he highlighted that illustrate government commitment include the establishment of a customs union, common market and a strong and active legislative assembly.
The 11 areas of reforming include starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, Others are enforcing contracts, and resolving insolvency.
Government has already laid strategies to improve on the indicators where it did not fare well including trading across borders and resolving insolvency.
Karim Tushabe, the legal consultant at the Doing Business unit of RDB said a new desk is yet to be established to educate the public on the benefits of insolvency.
“Being something new, the mindset isn’t to the level we want it to be, and having no companies filing for insolvency, we get to know that people are not aware of the benefits,” Tushabe explained.
According to the World Bank Doing Business report, Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbours, leading to an improvement in the trade logistics environment.
Government has embarked on increased operating hours and enhanced cooperation, and the electronic single window system at the borders to boost the country’s ranking.
Through the Rwanda Revenue Authority, the business hours were increased up to 24 hour-operations at the Gatuna border post and 16 hours up from 12 hours at Rusumo on the Rwanda-Tanzania border, and Cyanika which borders Uganda, as well as Magerwa.
The electronic single window system aims at facilitating trade by expediting and simplifying information flows between traders and government institutions, paving a way for information and administrative requirements for imports and exports to be submitted once at a single entry point on the internet.
Despite a few indicators, Rwanda topped the East African Community (EAC) at 45th position out of 183 countries in ease of doing business while the region as a whole improved its business environment for entrepreneurs.